Meat packers: Labels throw industry down ‘rabbit hole’

Meat packers will face a brutal financial blow unless a judge blocks the U.S. Department of Agriculture from enforcing a new labeling mandate, an attorney for the industry warned in a Washington, D.C., courtroom Tuesday.

Producers of beef, pork and chicken are taking aim at a “country-of-origin labeling” rule that will soon require them to list the countries where their meat is born, raised and slaughtered. The new rule — a more detailed update of labeling requirements the Agriculture Department first put into place in 2009 — is set to take effect in November.

Text Size

-

+

reset

The rule would throw the meat industry into “a rabbit hole of upstream and downstream changes” that would cost millions, attorney Cate Stetson told U.S. District Court Judge Ketanji Jackson during a two-hour hearing in which the industry asked for a preliminary injunction against USDA.

Stetson, an attorney for Hogan Lovells, represents a coalition of nine groups, including the American Meat Institute, as well as others representing ranchers and processors in the United States, Canada and Mexico.

Judge Jackson gave no indications of her leanings Tuesday but pledged to rule within two weeks on the injunction request.

The hearing was the meat industry’s most recent attempt to fight a current of consumer demands for more information about where food comes from. After failing to persuade Congress during multiple farm bill debates held during the past decade, the industry is now hoping for a better outcome in court or — failing that — at the World Trade Organization, where Canada and Mexico have been winning favorable opinions.

Stetson’s arguments were wide-ranging: She said the new rule compels speech in violation of the First Amendment, that it’s an arbitrary and capricious imposition on the industry and that the Agriculture Department went further than Congress intended it to.

“More information to satisfy consumers’ curiosity is not enough to satisfy the First Amendment. The government has to show more,” Stetson said, adding later: “It’s not really even a consumer question in the end.”

Agriculture Department attorney Tamra Moore said the new rule “provides more information” and that ensuring the accuracy of food labels is a critical aim.

Advocates, ranging from United States ranchers to consumer safety groups, have argued that the more information available in grocery stores, the better. But ranchers in Canada and Mexico complain that the policy undercuts the value of their product, and meat packers in the United States — especially near the northern and southern borders — say it would change how they do business.

Under current circumstances, pigs and cattle are purchased from all three countries and then kept in the same area before they’re slaughtered — a “co-mingling” process that the Agriculture Department’s new policy would ban, meat packers say. They claim they would have to invest more than $200 million industrywide in building new areas to segregate the animals, and would then lose money slowing their own processes to switch among animals requiring different labels.

Jackson said the co-mingling ban is the real issue — the “dog being wagged by the tail of the labeling.”

The opponents to the USDA’s COOL rule thought they had finally notched a victory against “Buy American” sentiments last year when, after complaints from Canada and Mexico, the WTO called the label requirement that had been in place since 2009 an unfair trade barrier and ordered the Agriculture Department to overhaul it.

Those opponents were incensed in May when the department announced that it would require even more specific information. As soon as the new policy takes effect in November, labels that could previously say “Product of Canada, USA” must instead separately list the countries where animals were born, raised and slaughtered.

No matter the judge’s ruling, it will not be the last word in the labeling dispute.

Canada and Mexico this month again requested that the World Trade Organization investigate whether the Agriculture Department’s new version of the rule — which those countries consider more scurrilous than the version they fought before — again falls short of international trade requirements. Both countries want the WTO’s approval to retaliate — with Canada saying it is willing to impose up to $1 billion per year in tariffs on U.S. products ranging from meat, apples and cherries to jewelry, furniture and mattresses and Mexico saying it, too, would push to eliminate low-tariff preferences for some U.S. goods.

Canada’s long list of targeted products could be aimed at persuading U.S. lawmakers whose home industries would be affected to ditch country-of-origin labeling requirements through a new farm bill that Congress is set to negotiate this fall.

Judge Jackson asked lawyers on both sides whether Congress approved a law that can’t possibly be implemented without triggering a trade dispute.